Analysts Think Sony's Onto A Winner With PSVR

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Analysts Think Sony's Onto A Winner With PSVR
October 13, 2016

Analysts think Sony's onto a winner with new virtual reality headset

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Sony's relatively cheaper, premium offering might swing the momentum in its favor as the battle in the virtual reality (VR) space intensifies, according to analysts.
 
On Thursday, the Japanese electronics maker launched the much anticipated VR headset for its PlayStation 4 gaming console, called the PlayStation VR (PS VR). Its suggested retail price is $399, notably lower than its high-end rivals - Facebook's Oculus Rift ($599) and HTC's Vive ($799).
 
"I think this is very nicely priced," Bob O'Donnell, founder and chief analyst at Technalysis Research, told CNBC's "The Rundown" on Thursday.
 
"The other big thing, with PlayStation VR, is it works with the 40 million PlayStation 4 that are already out there. That's another huge advantage because when you talk about the Vive, the Oculus Rift, you have got to get a high-end personal computer that most people don't have."
 
To use the PS VR, users would need a PS4, PlayStation Camera and PlayStation Move motion controller set up; however, most games can still be played using Sony's DualShock 4 wireless controllers, according to Sony.
 
The headset comes with a free demo disc that contains several playable game demos. Users can also download the Playroom VR, which is a collection of six VR games created for the PS VR. In a March blog post, Sony said more than 230 developers, from smaller independent teams to larger studios, were building content for the PS VR.
 
Three pillars of success
 
IDC's research manager for consumer, gaming and mobile entertainment, Lewis Ward, reckoned there were three key pillars for companies to differentiate from their competitors: The technology, the games and other entertainment content, and the social services surrounding both the technology and content. 
 
According to Ward, Sony's advantage lies in the first two because of its price and the potentially vast collection of content it can tap into.
 
"On the games category, they have a lot of neat content coming from Sony's worldwide studios and so forth," Ward told CNBC's "Squawk Box", adding while the games catalog is relatively thin at the moment, Sony is expected to ramp up the number of games released for the PS VR to 50 by end of 2016.
 
The release of the PlayStation is expected to give VR a serious boost, with many users set to experience the technology for the first time.
 
Last week, data analysis company IHS Markit said users were expected to spend as much as $7.9 billion on VR headsets and $3.3 billion on VR entertainment by 2020. That would represent a big surge as IHS expected consumers to spend $1.6 billion on headsets and $310 million on entertainment in 2016.
 
Analysts said the potential for VR extended well beyond gaming and into many categories including education - such as teaching children about the human body or space exploration - , travel and on-the-job training in areas such as healthcare and automotive to name a few.
 
Mike Vorhaus, president of Magid Advisors at Frank N. Magid Associates, told CNBC's "Street Signs" even board games such as monopoly could be "a lot of fun" in VR and added there were few things that VR would not make better. "[VR] may not make a symphonic concert better, but it'll make a Beyonce concert a lot better," Vorhaus said.
 
The money-makers of VR
 
Currently, the VR headset market is divided into two camps: makers of low volume, high-end VR headsets such as the PS VR and makers of high volume, low-end headsets that use smartphones for their displays.
 
Analysts expect the growth to be driven by the low-end smartphone-powered headsets because they are less expensive and users already have access to a vast number of VR-capable smartphones at the moment.
 
Revenue, on the other hand, Ward explained, is set to come from the more expensive headsets. With the headsets costing between $400 to $800, and along with a minimum spend of $60 or so on games, users could on average spend $500 or more over the course of a year, Ward said.
 
"In terms of revenue growth, the high end is going to punch out its weight class by a long shot."
 
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